Theory and Practice
Edited by Mohamed Ariff and Shamsher Mohamad
Chapter 13: Wealth effect of sukuk issuance announcement in two markets
Debt issuances traditionally attracts a negative sentiment, so the corporation’s shares decline in prices around the time of the issuances. Sukuk being another form of debt, none the less, structured differently from a conventional bond, should have some effect on the shares when sukuk are issued and traded. We explore this aspect in the chapter only to find that the market appears to generally favour sukuk issues as good news, so the share prices go up. However, during the Global Financial Crisis era, sukuk issuances attracted negative sentiments.
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